Learn the importance of building an emergency fund so that surprises won't derail your financial life. It's all about being a wise money manager so that you can live your life peacefully without major disruptions.
When you are in college, building an emergency fund seems like a distant dream. Saving up enough money to pay all your expenses for six months seems impossible, especially when you are living paycheck to paycheck. However, most people don’t realize that saving has more to do with discipline than the amount of your paycheck. Cutting back on the small things makes a bigger difference than you would think.
The first thing you should do is open a savings or money management account so that your money is accruing interest. Again, the amount you are able to save isn’t the most important aspect to saving, but, depositing your entire tax refund would be an incredible start. Just make sure to keep your savings account separate from the account you use for every day living. You don’t want to have easy access to your savings, so you won’t be as inclined to spend it, but, you need to be able to get to the money in case of an emergency.
Next, you need to create a budget, and stick to it! To create your budget, you need to add up your total monthly expenses. When you have figured out how much you have to pay every month, then you can figure out how much you are able to save every month. If you are unsure of how to create a budget, there are several online budgeting tools you can use. The most important thing involved with making a budget work for you is actually sticking to it.
Cutting back on small, unimportant, purchases doesn’t seem like much, but, you will be surprised at the difference it makes. Small changes, such as bringing in your lunch instead of spending $5 to buy it every day, adds up. For instance, if you save that $5 every day for one year, at the end of that year you will have $1825. Do that for five years, and you will have almost $10,000 saved. Hard to believe that such a small amount can add up to that much.
Another thing most people don’t take into consideration when thinking of ways to save money is the gas they use every day. If you live on-campus or close, you should try walking to work and school sometimes. Look into public transportation. Buying a bus pass may be cheaper than buying gas. There are so many ways to save money, you just have to want to do it. Keep a change jar, every evening when you get ready to change, empty your pocket change into that jar. At the end of the month, take your change and deposit it into your savings account. Remember, every little bit helps, and before you know it, you will be well on your way to having a comfy nest egg.